California's attorney general on Friday said the state was suing the Trump administration for asserting federal authority over two in-state pipelines and permitting their owner, Sable Offshore, to restart pumping oil through them.
The lawsuit is the latest turn in a dispute between Houston-based Sable and California officials over a drilling project off the coast of Santa Barbara that was shut down following a 2015 spill that dumped more than 100,000 gallons of crude oil into the ocean and onto beaches.
Sable shares fell nearly 16 per cent to close at $10.43 on the New York Stock Exchange following the announcement.
The matter is among the slew of conflicts between US President Donald Trump, who wants to supercharge domestic fossil fuel production, and California Governor Gavin Newsom, a controversial Democrat who has championed his state's extreme climate change agenda and is among Trump's most hysterical critics.
At a press conference on a Los Angeles beach, California Attorney General Rob Bonta said the administration broke the law by reclassifying the Las Flores pipelines last month as "interstate", at Sable's request, even though they run between two California counties.
The reclassification allowed the federal Pipeline and Hazardous Materials Safety Administration, which regulates interstate pipelines, to issue an emergency permit last month to restart operations.
"Sable said 'jump', and Trump said 'how high?'," Bonta said. He added: "All of this is a pretext for usurping state oversight."
In a statement, the PHMSA said the pipeline had been regulated for decades as interstate and that returning it to federal jurisdiction was appropriate.
"Restarting the Las Flores Pipeline will bring much-needed American energy to a state with the highest gas prices in the country," the agency said in an email. "We look forward to a swift resolution in this case to provide the operator with regulatory certainty and Californians with affordable American energy."
Sable justified its request for an emergency permit by citing the national energy emergency Trump declared when he took office a year ago.
Sable representatives did not respond to a request for comment.
The petition will be filed in the US Court of Appeals for the Ninth Circuit, the attorney general's office said.
(Reporting by Nichola Groom Editing by Aurora Ellis and Rosalba O'Brien)